LAND MOBILITY CHALLENGES Dr Pat Bogue, Broadmore Research & National Rural Network. Teagasc Farm Business Conference Tullamore, 28 th November 2013

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1 Dr Pat Bogue, Broadmore Research & National Rural Network Teagasc Farm Business Conference Tullamore, 28 th November 2013

2 Aim of Presentation Realities and issues around land mobility Findings from recent research Barriers to mobility/transfer Addressing the challenges Older farmers landowners Younger farmers aspirants Families

3 Setting the Scene Seeing both sides Respecting ownership rights Individual versus common good Economic, social, personal, emotional and psychological (status) issues intertwined Not just permanent transfer also temporary Too much focus on signing over Keeping the name on the land

4 Problem What Problem? Do we actually have a problem? Should we be concerned at all? Land is not going to disappear Will always be there Will naturally transfer But people living longer & settling later But: Transfer/succession burdens old and young Food Harvest 2020 targets Long term productivity, innovation and rejuvenation Productivity can decline with age Youthful vigour needs access to resources

5 Land Mobility LAND MOBILITY CHALLENGES Focused on ownership history Long-term leasing/tenancies not common What is land mobility? One farmer to another One generation to next Within family without Financial transaction and non-financial Lifetime or on death Within family Outside family Inheritors non-farming what to do with land? Essentially in control of landowner younger generation have little control or influence over mobility Policies can influence

6 Realities Half landowners over 55 years 6.2% under 35 years 26% over 65 years More aged over 80 years than under 35 years % in over 65 s and 53% in under 35 s Land sold 400 years in Ireland (70 in France) Level of sale minimal 0.3% in 2011 Short-term rental dominant In % rented an average of 19 ha (approx. 7% leasing tax relief)

7 Succession, Transfer & Mobility Not a single event but Process over a period of time Change in work and life Not only the land but inherent knowledge and attachment Whether permanent or temporary Major decision Requires advice and guidance Takes time to consider the options and make decisions

8 Research Findings (Macra na Feirme/DAFM/IFA/IFJ, NRN Research and Case Studies, Ulster Bank/ACA) 48% over 50 years no farming successor 43% of married and 76% of non-married 41% of those with children & 84% of those with no children 89% of successors male 77% with successors no concerns about succession 6% worried about marriage breakdown Time of succession Life transfer (37%) (Ulster Bank - 38%) Will (27%) (Ulster Bank - 31%) No children: 73% in will Children: 25% in will

9 Research Findings LAND MOBILITY CHALLENGES Farmers with no Farming Successors Important for farm to stay: Family owned 65%; Farmed by family 40%; In family name 23%. 18% need income from farm when no longer able to farm (32% possibly) 45% no intention to ever retire 16% yes and 39% possibly 59% no concerns about succession 13% farm might be sold 8% family might not farm Sources of Information and Advice Accountant 52%, Solicitor 24%, Meetings 21%, Advisor 12% 7% (37% - possibly) interested in succession planning service

10 Future Options (No Farming Successors) Reduce intensity 98% Change enterprise 95% Family/neighbours help 94% Stop farming and rent short-term 78% Stop farming and lease long-term 74% Pay labour/contractors 59% Explore collaborative options 36% Sell 27% Plant 27% Employ manager 19% Short-term coping mechanisms Long-term mechanisms

11 Supports for Land Mobility Early Retirement and Installation Aid ERS and IAS good incentive brought focus on 35 th birthday ERS encouraged both within families and without ERS no farming rule problematic Capital Acquisitions Tax Agricultural Relief Stamp Duty Relief for young farmers Capital gains tax retirement relief older farmers Land not leased/let change in Budget 2014 Land leasing tax relief No farming successor 19% aware of + 28% had heard of it 16% explored/interested & 39% possibly All play(ed) role in encouraging mobility but challenge remains

12 Barriers LAND MOBILITY CHALLENGES Lack of children family transfers Age of previous transfer late Average span of ownership short (20-30 years) Wait until pension age too late for next generation? Marriage breakdown Fear and concern in advance of decision Not deterring transfer but may delay transfer Lack of acceptance of concept of retired farmer Cannot perceive a role for themselves Culture shock Retirement scheme helped Gaining acceptance

13 Barriers LAND MOBILITY CHALLENGES Predominance of short-term arrangements Both facilitates and limits mobility Reluctance to face up to issue and make decisions Lack of awareness of: Support available; Incentives; and Options/opportunities CAP payments positive and negative Some activated and retired Others fear of making decisions for payment consequences 25% top-up may encourage within family Minimum stocking rates may encourage movement

14 Income Pressures Inability to support two families Absence of other income impossible to retire Encourage financial planning (all ages) Consideration of other enterprises Off-farm employment Inadequate pension provision fear of not farming Careful consideration of options including SFP May be more beneficial not farming Short term rental seen as best option Cost of family settlements 31% expect, 32% possibly (Ulster Bank) More anticipated where successor identified (72% versus 30%) Only considered when succession considered Sites (58%), financial payments (53%), land (20%)

15 Barriers to Long-Term Leasing Low uptake of tax relief Need to be convinced of merits Mistrust and scepticism about long-term arrangements Fear of tying into price Fear of losing rights to land Fear of non-payment Not compared with the benefits Fear of problems poor maintenance and management

16 Barriers to Partnerships/Collaborative Arrangements Mind-set of farmers Lack of awareness of options/details/real examples No tradition of sharing productive assets Fear of losing entitlements/benefits Sharing of risk and liabilities Perception of being only for dairying Learning process of working together Different approaches to farming 11 month system still pre-dominant Not everyone suited to partnership Giving up some control

17 Addressing the Barriers Information is key Encourage farmers to consider options seek information Start discussion and exploration of options Promote concept of retirement encourage other activities Encourage young people (and their parents) to look beyond the family farm for entry (renting, leasing, collaborative arrangements) Leasing transitional phase Highlight legal protection and encourage enforcement of lease terms and conditions Explore collaborative farming options Information and guidance from Teagasc Increase awareness of Taxation benefits Macra na Feirme Land Mobility Service

18 Addressing the Barriers Information & Advice Advice for both generations (and wider family) With successors and with none different message Successor Long planning phase Aware of all options Plan & prepare for family settlements No Successor Information on options Encourage exploring of options long term and short term Addressing concerns and fears Collaborative information campaign (post CAP) Preparation of information guide on all issues Encourage clients to attend Collate best practice examples/case studies

19 Encourage younger to be proactive Approach and convince landowners Explore new ideas (e.g. monthly payments) Challenge views on inheritance daughters Brokerage Information Exchange Those considering scaling up/entering and winding down/retiring Maintenance of incentives/measures encourage uptake Decline in advisors focus on management issues Reliance on solicitors and accountants Have you sufficient information? Keep up your efforts in serving needs of farmers

20 Sources of Information NRN Farm Partnerships ( NRN Case Studies Retirement and Land Mobility ( Macra Research Report Land Mobility and Succession in Ireland Teagasc Templates and Support Information IFA Masterlease Ulster Bank/ACA Survey of Farmer Opinions, Farm Development Plans and Financial Needs